The reasoning is simple: Funds will soon pass on to shareholders the profits they realized on stocks sold during the year.

When that distribution is made -- and most funds make it in December -- shareholders owe taxes on the payout, even if they simply reinvest the money and never touch the cash.

So if you buy a fund now and it pays out a huge gain in December, your tax bill goes up.

Wait until gains are doled out, and you can buy the same fund, minus the current tax liability. That's standard advice for people with taxable accounts. Tax-exempt investors -- people in 401(k) plans, individual retirement accounts and the alike -- shouldn't sweat current gains.

This advice is likely to get a lot of play this year. Already in 2000, there have been some huge distributions -- such as the 55 percent-of-net-asset-value whopper uncorked by Warburg Pincus Japan Small Co. in August -- and rumors abound of more to come.

Fund firms are addressing the issue earlier than ever, too.

Vanguard Group and Capital Research & Management are among a few fund families to make estimated-gain forecasts in September.

In mid-October, Fidelity Investments for the first time will provide interim capital-gains data, based on what funds have accrued through Sept. 30.

Several other fund firms have promised early release of gains data, which is a reason why some industry watchers expect this capital-gains season to be particularly painful.

But it is still a judgment call on the standard put-off-your-purchases advice.

To show why, let's examine the hypothetical cases of Jack and Mike. Each has $10,000 to invest. Jack waits, putting the cash into a tax-free money-market fund for the last two months of the year. The dividends on Jack's money are likely to amount to about $75, giving him $10,075 to invest once gains-distribution season ends.

Mike, by comparison, invests now, and happens to buy something that gets hot. In the last two months of the year, Mike's fund goes up 10 percent, but it also pays out a 20 percent capital-gains distribution.

That means the investment grew to $11,000, paid out $2,200 in gains -- which we'll assume was reinvested in the fund -- and that Mike's tax bill on the distribution (assuming long-term gains taxed at the 20 percent federal rate) amounts to $440. Subtract that $440 in taxes from Mike's $11,000 account value, and he's left with $10,560 at the end of capital gains season.

Before assuming that the Mikes of the world always beat the tax-wary Jacks, realize that the numbers could have been very different had we plugged in other results (and applicable state taxes). Mike could have wound up with a loss in the fund, but still had a tax bill due.